how much of each, and the par value of each share, and, if preferred, the advantages thereof over the common stock." § 366. South Carolina. Preferred stock may be issued if provided for at the organization of the corporation, or afterwards by a two-thirds stock vote.61 § 367. Virginia. Every corporation shall have power to create two or more kinds of stock, of such classes, with such designations, preferences, and voting powers, or restrictions or qualifications thereof, as shall be stated and expressed in the charter, certificate of incorporation,` or articles of association, or in any amendment thereof; and the power to increase or decrease the stock, as in this act elsewhere provided, shall apply to all or any of the classes of stock. Any preferred stock that may be issued may, if desired, be made subject to redemption at any time after three years from the issue thereof at a price not less than par, and the holders thereof shall be entitled to receive and the corporation bound to pay thereon dividends at such rates and on such conditions as shall be stated in its charter, or any amendment thereof, or in the original or amended certificate of incorporation, or articles of association, or in an amendment thereof; and such dividends may be made payable before any dividends shall be set apart or paid on the common stock, and such dividends may be made cumulative.62 8368. West Virginia. The stockholders at a meeting duly notified may provide for issuing preferred stock, provided that the maximum capital shall not be exceeded. They may make such regulations as 60 R. I. Gen. L. ch. 176, § 3. 61 S. Car. 1901, No. 401. 02 Va. Corp. Supp. ch. 5, § 13. they deem proper respecting the preference over common stock in the matter of dividends or otherwise.63 8369. Wisconsin. Corporations now existing or hereafter organized may issue preferred stock if all stockholders consent. This may secure preference in payment of dividends at a specified rate, but shall not give preference in distribution of the assets, nor shall dividends be paid on it except from profits.64 370, Wyoming. A corporation may issue preferred stock by the unanimous assent of the stockholders. It may stipulate that the holders of such stock shall be entitled to dividends not exceeding seven per cent. per annum in preference to all other stockholders; provided that if the earnings of the corporation available for dividends are more than seven per cent., all the stock shall participate equally in dividends.65 Any corporation may provide in its certificate of incorporation for such stock. Whenever preferred stock is issued the holder of common stock shall have the first opportunity to purchase it, in proportion to their holdings of common stock.67 § 371. Conversion of one kind of security into another. Provisions are made in several States for the conversion of one form of security into another. In Missouri and New Jersey bonds may be converted into common stock, by vote of the stockholders, 68 or by provision in the bonds themselves.69 In Ohio money may be borrowed with the agreement that the creditors may have the right to convert it into 63 W. Va. Code, ch. 53, § 16. 04 Wis. Rev. Stat. § 1759 a. 65 Wyo. Rev. Stat. § 3041. 66 Ibid. § 3042. 67 Ibid. 3043. 68 Mo. Rev. Stat. § 1337; See Ky. 1904, ch. 105, § 2. 69 N. J. 1902, P. L. p. 217. common or preferred stock.70 In Nevada preferred stock may be converted into bonds,"1 and in New Jersey it may be retired by an issue of bonds.72 $372. Corporation owning its own stock. A corporation, having power to acquire personal property, may at common law own its own stock.73 In a few States statutory provisions are made, permitting or forbidding such ownership.74 In West Virginia is a provision which through purchase by a corporation of its own stock might lead to a reduction of capital without a formal vote to that effect. "If the corporation acquire shares of its own stock it may either extinguish or sell the same. If extinguished it shall operate to that extent as a reduction of the amount of its capital stock." 75 No corporation shall directly or indirectly vote upon any share of its own stock.76 § 373. Holding stock and bonds of other corporations. While in general a corporation, having power to take and hold personal property, would have the right to own the stock or bonds of another corporation, the common law or the ordinary anti-trust statutes might often make the exercise of such power of doubtful legality." Elaborate statutory provisions have been made in a few States to settle the question. The Connecticut statute is as follows: "Any corporation not prohibited by any provision in its charter, articles of associa 70 Oh. Rev. Stat. § 3257. 71 Nev. 1903, ch. 121, § 36; See Ky. 1904, ch. 105, § 2. 72 N. J. 1902, P. L. p. 217. 73 Berger v. United States Steel Corp., 63 N. J. Eq. 809, 53 Atl. 68. 74 See Del. Corp. Supp. § 36; N. Dak. Civ. Code, § 2880; Okla. Stat. § 959; S. Dak. Code, §§ 425, 463, 464. 75 W. Va. Code, ch. 53, § 18, as amended 1901, ch. 35. 76 Del. Corp. Supp. § 19; Mass. 1903, ch. 437, § 23; Mo. Rev. Stat. § 950; N. J. Corp. Supp. § 38; N. Car. 1901, ch. 2, § 43; Va. Corp. Supp. ch. 5, § 23; W. Va. Code, ch. 53, § 18; 1901, ch. 35. 77 United States v. Northern Securities Co., 193 U. S. 197. tion, or certificate of incorporation or by any general law, except a bank, trust company, or life insurance company, may acquire, purchase, and hold the stock or securities of any other corporation. Any such corporation, except a bank, trust company, or life insurance company, may acquire, purchase and hold its own stock. No corporation shall acquire, purchase, and hold its own stock unless to prevent loss upon a debt previously contracted, except with the approval of stockholders owning three-fourths of its entire outstanding capital stock given at a stockholders' meeting warned and held for the purpose; and such corporation shall not vote upon shares of its own stock. No corporation shall purchase any of its own stock when it is insolvent, or by such purchase render itself immediately insolvent. If any corporation shall purchase its own stock when it is insolvent, or so render itself immediately insolvent, the directors assenting to such purchase shall be personally liable for any debts of such corporation existing at the time of such purchase.' 11 78 In New Jersey it is provided that "corporations having for their object the building, construction or repairing of railroads, water, gas or electric works, tunnels, bridges, viaducts, canals, hotels, wharves, piers or any like works of internal improvement or public use or utility, may subscribe for, take, pay for, hold, use and dispose of stock or bonds in any corporations formed for the purpose of constructing, maintaining and operating any such public works; and the directors of any such corporation formed for the purpose of constructing, maintaining and operating any public work of the description aforesaid may accept in payment of any such subscription, or purchase, real or personal property, necessary for the purposes of such corporation, or work, labor and services performed or materials furnished to or for such corporation to the amount of the value thereof, and from time to time issue upon any such subscription or purchase, in such installments or proportions as such directors may agree upon, full-paid 78 Conn. 1903, ch. 194, § 11. stock in full or partial performance of the whole or any part of such subscription or purchase, and the stock so issued shall be full-paid stock and not liable to any further call, neither shall the holder thereof be liable for any further payments, and in all statements and reports of the corporation to be published or filed this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported in this respect according to the fact." 79 The New York statutes are as follows: Any stock corporation, domestic or foreign, now existing or hereafter organized, except moneyed corporations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations if authorized so to do by a provision in the certificate of incorporation of such stock corporation, or in any certificate amendatory thereof or supplementary thereto, filed in pursuance of law, or if the corporation whose stock is so purchased, acquired, held or disposed of is engaged in a business similar to that of such stock corporation, or engaged in the manufacture, use or sale of the property or in the construction or operation of works necessary or useful in the business of such stock corporation, or in which or in connection with which the manufactured articles, product or property of such stock corporation are or may be used, or is a corporation with which such stock corporation is or may be authorized to consolidate. When any such corporation shall be a stockholder in any other corporation, as herein provided, its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stockholders therein, and the corporation holding such stock shall possess and exercise in respect thereof all the rights, powers and privileges of individual owners or holders of such stock." 80 "A corporation by unanimous vote of its 79 N. J. Corp. Supp. § 50. 80 N. Y. Stock Corp. L. § 40, as amended 1902, ch. 601. See also Me. |